Milestone: China Now General Motors' Biggest Market

Joseph Szczesny, CNBC Contributor

Monday, 8 Jul 2013 | 2:42 PM ETCNBC.com

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Peter Parks | AFP | Getty Images

Despite signs of a slowdown in the Chinese economy, General Motors posted record first-half sales in China, where GM sales now have surpassed the total number of vehicles the company sells in its home market of the United States.

GM and its Chinese joint venture partners saw sales surge by 10.6 percent during the first half of 2013, to nearly 1.6 million vehicles, an all-time record that positions it as the booming Asian nation's No. 2 automotive manufacturer. It sold just over 1.4 million vehicles in the U.S. during the same period.

GM isn't the only American maker outpacing the growth of the overall Chinese market. Rival Ford set its own record for the first half, with sales surging 47 percent there and demand up 44 percent in June.

While several makers have yet to report their final numbers, it appears that the two American makers significantly outperformed the overall Chinese market. Passenger car sales for the first half expected to be up 14 percent, with June growth a more modest 10 percent year-over-year, according to domestic industry sources.

"We have seen strong vehicle demand across China, particularly in the midsize, upper-medium, luxury and SUV segments," said Bob Socia, president of GM China, who noted that June demand was up 10.6 percent from the previous high of 236,207 units a year before.

Socia forecasts that Chinese demand for GM passenger cars and commercial vehicles will "remain robust through the end of the year." That suggests that China will remain the maker's largest market for the near-term future, despite the ongoing revival of U.S. automotive demand.

It further emphasizes the dramatic transition that was underway even before GM's transformational bankruptcy in 2009. Today, nearly three of every four vehicles the company produces are sold outside the United States, according to GM data.

Ford has also been rapidly increasing foreign sales, but it lags well behind GM in the key Chinese market. The second-largest U.S. automaker got off to a significantly later start in China and is playing an admitted game of catch-up. Just last month, Ford CEO Alan Mulally swept through China to announce several critical new projects, including a $500 million engine plant in Chongqing and a major expansion of the company Xiaolan assembly plant.

Though June, Ford sold 407,721 vehicles in China, with demand reaching 75,254 in June alone—both records.

GM, on the other hand, posted a 10.6 percent gain from the record for the period in 2012, to 1,567,392 vehicles—10 percent more than the 1,420,346 it moved in the U.S. during the first half.

Buick sales in China rose 16.9 percent from first-half 2012, to 401,327 units, led by record demand for the original Excelle family, Excelle XT and GT, Regal and Encore. Its sales in China surpassed those in the U.S. by a margin of four to one—even though its U.S. sales were up 11.8 percent, to 100,837 units, according to GM figures.

GM has 12 joint ventures, two wholly owned foreign enterprises and more than 55,000 employees in China. Passenger cars and commercial vehicles are sold under the Baojun, Buick, Cadillac, Chevrolet, Jiefang, Opel and Wuling brands. In 2012, GM sold more than 2.8 million vehicles in China.